CEOs: Future is in the Internet, software, life sciences

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By Brian Sullivan

(IDG) -- The Internet, software and life sciences will the three biggest growth areas in technology in the coming year, according to a Deloitte & Touche LLP survey of CEOs in its Fast 500 index.

The New York-based consulting and accounting firm surveyed the CEOs of what it considers the 500 fastest-growing high-tech companies in the world. The results showed that 27 percent of the CEOs believed that the Internet had the greatest potential for growth in the coming year, followed by 24 percent who chose software and 23 percent who chose life-science applications.

In encouraging news, 89 percent said they planned to hire new employees in the coming year, while 8 percent said they won't be hiring, and 3 percent planned a reduction in employees.

North America was picked by 59 percent of CEOs as the region with the greatest growth potential in the next five years. Western Europe came in second with 20 percent, followed by Japan with 7 percent and China with 3 percent. India, Russia and Central and South America all drew 1 percent, while other areas took the remaining 7 percent.

Last year, the results were more evenly distributed, with North America selected by 30 percent of CEOs, China by 24 percent and Western Europe by 23 percent.

This year also saw changes in how highly CEOs value their employees. In the 2001 survey, 49 percent of the CEOs said that high-quality employees made the biggest contribution to their company's success. This year, only 30 percent pointed to employees as having made the greatest contribution. Of those surveyed, 29 percent cited products, 23 percent said having the right timing in the marketplace, and 10 percent said proprietary technology were the biggest contributors.

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Another change from 2001 to 2002 was in the area of what CEOs see as their greatest challenge. In 2001, 30 percent said managing expectations was their greatest challenge, followed by 21 percent who said managing risk. Eighteen percent said achieving profitability, 13 percent said delegating responsibility and 10 percent said uncontrollable growth. The rest fell into the "other" category.

But this year's survey saw profitability topping the list with 34 percent, followed by developing leaders and delegating responsibility with 24 percent, managing expectations at 10 percent, managing risk and engaging employees in the company vision each taking 8 percent and the rest falling over a number of other categories. Only 2 percent called containing costs their biggest personal challenge.

This year's survey swerved away from past years due to the events of Sept. 11 and the downturn in the economy. This year, questions were included on how CEOs were handling security and whether the downturn was affecting their companies and their view of the future.

Most of the CEOs expressed some optimism that their companies would sustain high rates of growth in the next 12 months. Forty-one percent said they were "very confident" their companies could sustain high rates of growth, 21 percent were "extremely confident" and 28 percent were "somewhat confident." Only 4 percent were pessimistic.

A full 56 percent said the nation's current emphasis on security would have no impact on their company. Thirty-seven percent thought it would boost growth, 4 percent thought it would inhibit growth and 3 percent answered "other."

Each year, Deloitte & Touche selects the Fast 500 from companies that have sustained a high rate of growth during the past five years.

The Fast 500 are drawn from companies headquartered in North America that have been in business for at least five years, that have current operating revenues of at least $1 million and that own a proprietary technology. This year's list includes San Jose-based eBay Inc.; Bellevue, Wash.-based InfoSpace Inc.; and Ottawa-based Dynex Power.